What is a stabilisation fund?

BeFrank
13 Sep 2017

As the retirement age approaches, investments are increasingly made in pension stabilisation funds. These pension stabilisation funds are structured in such a way that they operate inversely to interest rates. When interest rates fall, they increase in value, and when interest rates rise, they fall in value. Bear in mind that the amount of pension you can purchase depends not only on the amount of the value accrued, but also on the interest rates at the time when you purchase pension. If interest rates are low, you will be able to purchase less pension, which is of course a risk.

Naturally, this is a risk, and therefore, as the retirement age approaches, we increasingly invest in pension stabilisation funds, and thereby reduce the influence of the market interest rate on the amount of the pension benefits.